The Bitcoin Bonanza
The year is 2020. The Australian wildfires of January have been ruled a distant dream, Donald Trump’s acquittance in February ruins a lot of Valentines…
The year is 2020. The Australian wildfires of January have been ruled a distant dream, Donald Trump’s acquittance in February ruins a lot of Valentines, March spanned over a long, dreary century of sleeping and binge-eating as a pandemic is declared, the entire 30 days of April are still missing (please return if found, PLEASE), articles on May’s murder hornets are conveniently scrolled over, and we don’t talk about June, or the Ebola outbreak it saw, or even the potential swine flu pandemic. Hahaha. Ha.
2020 has been eventful, to say the least.
And this doesn’t even begin to cover the million other things that went wrong this year.
By the time July rolled around, we humans, animals of trust and instinct, betrayed and trodden over by 2020’s poor taste in pranks, were wary, holding our breaths, waiting for the next shoe to drop.
But July didn’t deliver the usual package of disappointment and disbelief, not at first.
We began to take comfort in the rare absence of panic, naively believing that it would last, finally. 2020’s curse was over, and peace was imminent.
What we failed to notice was this forsaken month’s long-term game.
With the foundations of harmony built, July realized her plans, on an unremarkable evening of what was supposed to be another unremarkable day, when the world’s favourite social media platform became prey to one of the biggest, most scandalous cryptocurrency scams of the millennium.
From the official accounts of the most prominent public figures across the globe- Bill Gates, Elon Musk, Joe Biden, Barack Obama, Michael Bloomberg, Jeff Bezos, Kim and Kanye, and more, to the most powerful MNCs and businesses the likes of Uber and Apple- all hacked to display a simple, standard, and obviously shady message offering a too good-to-be-true bitcoin deal.
Bitcoins worth in millions, traded and stolen in the short space of an hour from unsuspecting followers who fell for the trap, placing their faith on the small blue verified mark, the damage done as quick and sudden as the attack came, leaving the played in a pitiful frenzy.
All this conversation begs emphasis on one important detail-
Strangely enough, everyone seems to know about it, but not quite enough. There’s nobody who doesn’t comprehend the status and power of this cryptocurrency, yet we couldn’t explain much of its existence if asked.
This scam, like all the others so far, is irreversible. But it can be dissected, deconstructed, broken down and rearranged to form a coherent image. It can be understood.
With that optimism, lets tackle the various oddities and intricacies of this conundrum.
What exactly is this Bitcoin?
For one, don’t let the cute name fool you. A lethal decentralized digital currency operating on free reins, perilous in how it follows no framework, no law, no rules. A wild beast left free to prey and plunder as it desires, a something always in your reach, yet can never quite be grasped. No backing of any official, trusted organisation or person, built from the ground up on the ideas of no boundaries, no limitations, a free world- a lawless outcast.
Maybe you’re wondering, if it’s such a big deal, why has Bitcoin not been restrained yet?
Truth is, it’s not that easy.
To give more context, consider Bitcoin’s sketchy origins.
The inventor and deployer of this massive system remains unknown, despite relentless investigations in the past twelve years. Infamous under the alias of Satoshi Nakamoto, they are as shrouded in mystery as the rest of this scheme and their raison d’être.
The story (or at least, what we know of it) goes like this.
On 18th of August, 2008, an unassuming domain, going by ‘bitcoin.org’ is created. This is followed by a new addition to the cryptocurrency mailing list- a link to a paper, titled ‘Bitcoin: A Peer-to-peer electronic cash system’ authored by the creator Satoshi themself.
The tale beyond this, if researched on the net, will make little sense with all the tech junk terms thrown around like no one’s business. So, we simplify it for you.
User Unknown creates the bitcoin network, embeds a secret text in the block of code referencing a future financial crisis for a bank as mentioned in the local newspaper, the news enough to incentivize the purchase of bitcoins by the code-crackers.
The cryptocurrency goes on to be recognised and supported by the creators of bitcoin’s predecessors, the platform gains increased traction and awareness leading to the first known commercial transaction using bitcoin in 2010, occurring when programmer Laszlo Hanyecz bought two Papa John’s pizzas for 10,000 bitcoins.
Shortly after, Nakamoto mysteriously disappears, handing control of the code repository -the baby of any decent programmer- in the hands of Gavin Andresen, who subsequently became the lead developer and worked for even greater decentralization, aka, making the process of tracing the involved parties even more difficult, if not utterly impossible.
The only solid assumptions on the identity of the inventor, from scrapped pieces of evidence, is that they are fluent in English, might be British, possibly a libertarian, and-
Might be more than one person.
All said and done, this still doesn’t explain…why Bitcoin? Why use it? Apart from the Agatha Christie mysteries’ aura that emanates from its circumstances, where’s the charm?
Glad you asked. (You did…right? We’re going to assume anyway.)
The answer to that, lies in the mechanics of its operation.
Marketplaces called “bitcoin exchanges” allow people to buy or sell bitcoins using different currencies. Coinbase is a leading exchange, along with Bitstamp and Bitfinex.
Transference is just as easy, where people can send bitcoins to each other using mobile apps or their computers, similar to the practice of sending cash digitally. Bitcoins are stored in a digital wallet, functioning either on cloud or the user’s pc, though they admittedly come with their own set of risks.
Bitcoin also offers dysregulation and ease of trade, since international payments are easy and cheap because bitcoins are not tied to any country or subject to regulation, thus involving no fees or configuration issues, i.e. Borderless transfers.
Not everyone purchases it to buy merchandise anonymously. A 2019 survey by Grayscale shows some people just buy bitcoins as an investment, hoping that they’ll go up in value, which is incidentally where much of Bitcoin’s hype arises from.
As the use of Bitcoin as a currency becomes more widespread and understanding of the nature of cryptocurrency more common, investors will be increasingly comfortable with considering it a worthy investment over the coming years.
Transactions are made with no middle men – no banks, no regulators, no state apparatus, no credit card fees-
Sounding like a good deal, yes?
And that’s not even the end, since trading is not the only way to be a proud holder of this puzzling currency.
Prepare to familiarize yourself with a new term- Mining.
The system allows people to compete to ‘mine’ bitcoins, employing computers to solve complex math puzzles and equations. This is, in fact, how bitcoins are ‘created’. Secondary data reveals that, as of the present, a winner is rewarded with 12.5 bitcoins roughly every 10 minutes.
To put that into perspective, in the time you spent reading this article up to this point, someone out there just became 12.5 bitcoins richer.
(If that hurt your empty wallet, it was very much meant to).
The reason so little is known about Bitcoin, and why it is preferred over other mediums, is the existence of an enviable veil of anonymity.
Though each bitcoin transaction is recorded in a public log, names of buyers and sellers are never revealed – only their wallet IDs. While that keeps bitcoin users’ transactions private, it also lets them buy or sell anything without easily tracing it back to them.
That is also why it has become the currency of choice for people online buying drugs or other illicit activities, because it’s ridiculously easy to get away without leaving lasting tracks.
One of the most bizarre benefits, is its resistance to inflation. Before disappearing for good, Nakamoto had set a limit to the total amount of bitcoins that could ever exist, capping it at 21 million.
Study explains that this limit effectively makes Bitcoin inflation-resistant, giving it a major advantage over traditional currencies, all of which are subject to losing value at certain times. Bitcoin will always retain its value, and also make it a viable alternative to traditional currencies in countries where hyperinflation is rampant and cruel, such as Venezuela.
Even realistically, fiat currencies fail to compete with bitcoin in terms of the pros-versus-cons distinction, mostly accounting to the human greed of printing more notes, and procuring them as required.
Of course, governments across the globe are concerned about taxation and their lack of control over the currency, Bitcoin being a constant source of insecurity for the law makers and upholders. Countries like Japan, China and Australia have already begun weighing regulations, though it’s too early to see any tangible result.
The core characteristics of a good candidate for ‘Money’ entails acting as a store of value, allowing convenient remittances, controlling the inflation-deflation balance, and more.
And it is no secret, that Bitcoin fits the bill better than any of the Fiat currencies in operation today. Perhaps a deflationary currency, built on code and mathematics, is the next step in the evolution of human economies. Or perhaps not.
No one, maybe not even Nakamoto, can accurately estimate what will become of Bitcoin in the future. Most odds are in its favour, with the potential of Bitcoin seeming infinite, and the world the perfect environment for it to thrive. There’s always a small chance, of course, that this system fizzles out like a light bulb, giving no outs or escapes.
But remember, that even if the year is 2020, foresight is not. Watching, waiting, and hoping it won’t all crash and burn is the recommended approach from our side- both for studying Bitcoin and its timeline of developments, and awaiting the next quirky disaster to strike Humanity.